Thursday 18 July 2019

Central Bank has no idea how many mortgages sold to vulture funds

Charlie Weston Personal Finance Editor

THE Central Bank has no data on how many home mortgages were sold to unregulated vulture firms, it has emerged.

And there is no clear picture of which funds bought the mortgages that were originally taken out from banks based here, Minister for Finance Michael Noonan has admitted.

Thousands of homeowners have had their mortgages sold to unregulated vulture funds, with fears they will be mistreated if they get into arrears.

Mr Noonan said it is estimated that between 8,000 to 10,000 mortgages have been sold, but experts said the figure could be much higher, even as much as 20,000.

So-called unregulated "vulture funds" that buy up mortgages here are not subject to Central Bank rules, which leaves the homeowners vulnerable to being mistreated if they are in arrears.

Now Mr Noonan has admitted in a Dail reply to Fianna Fail's Michael McGrath that the Central Bank does not have information on what loans were sold, and to which funds.

Mr McGrath asked for a full list of which loan funds bought residential mortgages, and how many they each bought.

The minister replied: "In general, the Central Bank has no role in approving the sale or transfer of loan books to third parties, and it has no data available at this time on the number and book value of such sales or transfers for the period requested."

Funds that are not regulated here do not have to abide by the Central Bank's code of conduct on mortgage arrears, which provides protections to those who default.

The Government has promised legislation that will partially protect those whose mortgages were sold, but it has yet to be enacted.

Mr McGrath said: "It is deeply disturbing that we don't have a clear picture of the number of mortgages that have been sold to unregulated third parties."

He said people whose mortgages were sold to an unregulated buyer were in a "legal no-man's land".

Asked why it has not kept data on mortgage sales, a spokeswoman for the Central Bank said that it had no power to collect this data due to a current gap in the legislation.

This is likely to be rectified under proposed legislation, which aims to extend protections like the arrears code to people whose mortgage was sold. "The Central Bank has expressed its concern that in the absence of such protections borrowers are at risk of not being treated fairly," she said.

Among the buyers of mortgage books is Tanager, an American-owned private equity fund that bought up 2,000 distressed home loans from Bank of Scotland Ireland.

The state-owned IBRC, which is in liquidation, sold off home loans from customers of Irish Nationwide to Lone Star - which owns Shoreline Residential - and Oaktree Capital Management, which owns Mars Capital Ireland. Both undertook to abide by the Central Bank code.

Permanent TSB sold around 2,200 home loans to Mars Capital, with half of them in arrears. GE Money sold its subprime mortgages to Pepper. Bank of Ireland has sold mortgages, although they have been sold to a firm that is regulated.

Irish Independent

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